Israeli Companies Find A Familiar Home Away From Home In The Lone Star State

In Israel, a country with about 6,000 startups and just over 9 million people, executives are searching for newer, bigger U.S. sites as footholds to pitch their technology companies to Americans.

But instead of Silicon Valley or New York City, Israeli companies are settling in Texas.

At least five Israeli companies either opened U.S. headquarters or moved their global headquarters to Texas over the last five years, according to YTexas, an advocacy group promoting Texas as a headquarters hub. That's more than any other nation tracked by the organization, more even than the UK, which rings in second with four.

But Israeli-U.S. business experts suspect the number is much higher, possibly in the dozens, due to the number of one-person Israeli startups moving to the U.S., and Texas, in particular.

"Texas and Israel actually have a lot of cultural overlap. That can be a little unexpected to people at first glance," Toba Hellerstein told Bisnow.

Hellerstein, executive director at the Texas-Israel Alliance, which advocates for stronger business ties between Texas and Israel, excitedly described the similarities in Texan and Israeli values. That encompasses everything from their shared sense of entrepreneurship to a kind of cowboy spirit.

"The fundamental values are so similar, that it's just like, an initial hump [to translate company culture]," Hellerstein said. "Israelis do very well in Texas, they blended very well. They take to it like water."

Israeli companies, eager for American business, want to plant headquarters flags in the U.S., and they're picking Texas for its large Jewish population, its business-friendly policies, and its matched eagerness from Texans to do business with Israel.

Though Silicon Valley may be the more obvious choice for a tech startup, it's too expensive, according to experts like Hellerstein. Israeli companies also find less pushback in Texas from those with political differences with the nation-state. While a common pro-Palestinian source of protest — the boycott, divestment and sanctions movement — has gathered some steam with companies in other states, Texas has made such protest illegal for any contractor and even maintains a public list of businesses, such as Ben & Jerry's, that actively boycott Israel. 

Portnox, a cloud-based cybersecurity firm originally based in Ra’anana, Israel, is one company that has made a new home in Texas.

As it finished a $22M Series A funding round at the beginning of this year, it opened its new global headquarters in Austin's Oak Hill neighborhood. Austin's status as a new national tech powerhouse attracted the company as did proximity to its largest venture capital funder, Elsewhere Partners, which is also based in Austin. Portnox still has an Israeli presence, where most of its Israeli workers still live, but it has ramped up hiring dramatically in the U.S., growing its workforce 60% over the past nine months. Half its U.S. employee base works in Austin, while the other half works remotely across the U.S.

"You're typically looking for areas you're already familiar with, which kind of ended up where were are locationally," Portnox Director of Product Marketing Michael Marvin said of the company's site selection process, which he wasn't directly involved with. "I think it just makes sense for other tech, surrounding yourself with the best and brightest kind of helps yourself improve ideas."

Other recent Israel-to-Texas transplants include formerly Tel Aviv-based network automation company BackBox, which opened a Dallas headquarters in 2021, and energy software firm Sensoleak, which came to Houston from Haifa in 2018. Like Portnox, REE Automotive and Quali have launched operations in Austin.

Though Austin is rapidly becoming more expensive, it's still cheaper than Silicon Valley, according to those involved with bringing Israeli companies to Texas. Some, looking for an older, more family-friendly environment, are turning to Dallas, or, less frequently, Houston. But Austin hasn't lost its trendiness just yet.

"You Google homes in the Bay Area, I mean, it just doesn't compare … I can see how maybe in the future [unaffordability] could be the case, but for now, that's still all very attractive," Hellerstein said. "In Israel, it's such a saturated country in terms of population, there's so much traffic, so people are used to driving an hour and a half to get to work. [There's] a whole social life built around, 'I'm going to call you on my drive.'"

By contrast, she said, transplanted Israelis can live up to an hour away, in San Marcos for example, "and for them, it's nothing."

Cybersecurity companies are among the larger Israeli firms moving to Texas, but Hellerstein also pointed to Israel's history of creating water technology, like desalination plants. The vast majority of the country's water supply comes from the sea, meaning there is a huge drive to make water drinkable. Those same water tech companies are now coming to arid West Texas.

Medical technology is popular, too, with companies eyeing the Texas Medical Center in Houston to work in digital health technology, medical devices, pharmaceuticals and more, eschewing life sciences hubs like Boston.

Israeli-U.S. experts say the trend will only continue.

"We had a networking event in Austin for Israeli companies. We had over 100 people registered, we have 60 people coming. The majority of them moved to Austin, Texas, in the last few years," said Orna Avraham, a Houston-based Israeli who heads the Economic and Trade Mission to the South and Mid-West in the U.S. at Israel's Foreign Trade Administration.

Though Austin is a huge focus for companies, Avraham said she's seeing a lot of companies express interest in Houston and San Antonio.

"There's a lot of things that Texas has to offer that other cities can't offer," Avraham said. "The volume of businesses that are working here, the amount of collaboration you can create here, the atmosphere — Texas is very welcoming. I see it getting bigger and bigger. As direct evidence, we are getting more and more work. More companies are reaching out to us."

Marvin echoed that Texas will continue to see more Israeli companies coming.

"There's a huge market opportunity in the U.S., and there's amazing innovation occurring in Israel. So that's going to continue to happen,” he said. 

Though modern U.S. policy has generally been friendly to Israel, Texas Gov. Greg Abbott is hugely supportive of the country, leading an economic development mission to Israel in January 2020 and decrying both companies and individuals that boycott the country.

On that trip, Abbott was given the Friends of Zion award, given to world leaders who support Israel and Jewish people. Former U.S. Presidents George W. Bush and Donald Trump have also received the award. Abbott has led several economic trade missions to Israel, according to the Friends of Zion Heritage Center in Jerusalem. 

“Companies continue to invest in the Lone Star State because of the business climate cultivated by our state’s leaders,” Texas Economic Development Corp. CEO Robert Allen said in January 2020 regarding one such trade mission. “Gov. Abbott’s commitment to engaging with CEOs and executives around the world is playing a pivotal role in ensuring Texas remains a global economic powerhouse, creating a more prosperous future for our great state.”

That support is baked into policy, as contractors that work with the state of Texas must sign documentation asserting they do not boycott Israel. A federal judge ruled the law unconstitutional earlier this year in a case involving a contract with the city of Houston, but stopped short of blocking the law.

Pro-Israel sentiment among state leaders has given some companies a comfort level other states can't offer. Hellerstein said some Israelis, however, have questions about American violence, such as school shootings, a fear she dismissed as overblown.

"It just depends on the person, the way it would depend on the person in Texas," she said. "It's a very opinionated country. They say, if you've got two rabbis, you've got three opinions. It's very difficult to categorize them as a monolith in terms of what their political views would be."